Toyota will offer zero interest loans on its new cars across Europe to revive sagging sales, the Nikkei business daily has reported.

Toyota launched zero interest loans in the United States in October and the newspaper said it will use 0% finance to help promote the sales of late product-cycle models ahead of replacement.

Although Toyota is seen as a relatively well placed automaker, it nevertheless is being impacted by tough market conditions around the world, especially in the US and Europe and has recently lowered its profitability expectations.

Renault's Patrick Pelata has said that he expects Europe's auto market to decline 20% in 2009. Were it to do so, manufacturers would be under severe pressure to offer customer incentives to hold volume up.